Oregon’s Health Care Market Oversight (HCMO) program is reviewing a proposal to spin off Providence’s home health and hospice services into a joint venture supported by private equity.

Sarah Bartlemann, the cost programs manager for Oregon’s Health Authority (OHA), confirmed the review in a letter to a Washington D.C. attorney representing Compassus, Providence’s partner in the deal.

OHA’s HCMO program evaluates health care business transactions to ensure they do not negatively impact citizens or communities. The program also empowers state regulators to impose conditions on acquisitions and mergers or reject deals they find anti-competitive.

Critics of the deal argue that the joint venture will result in cost-cutting measures, increased staff workloads and reduced patient services.

Providence is the fifth largest nonprofit health care provider in the United States, while Compassus is a private equity-backed provider of home-based care services operating in more than 30 states.

The two companies initially planned to complete the deal by Dec. 29, according to licensing records. However, the state’s review will likely delay this timeline, as the HCMO requires a minimum of 30 days and can take up to 180 days to finalize its review.

On Dec. 10, Thomas Doyle, general counsel for the Oregon Nurses Association, a labor union, wrote to the director of OHA. In his letter, he requested the authority to intervene in the merger and acquisition process. He urged OHA to “prevent any further changes in the ownership, license or administration over Providence health care entities, including home health and hospice agency licensures, while OHA reviews whether the proposed joint venture must go through the HCMO process.”

OHA is currently accepting public comments regarding the deal on its website. Nearly all of the submitted comments are opposed to the transaction.

One comment from Paul Goldberg, a retired director of the Oregon Nurses Association, expressed concern about Providence’s motivation for pursuing the deal.

“I am concerned that Providence is trying to structure a joint venture that avoids its obligations as a non-profit, tax-exempt hospital,” Goldberg wrote. “It should be required to ensure that its assets transferred to a for-profit entity are utilized for the public good. After all, many of its assets have accumulated over time due to its non-taxed status.”

In another comment, Kirsten Halson, an occupational therapist employed at Providence, expressed her concern that Compassus may cut programs that are seen as unprofitable, which would harm patients and caregivers.

“For-profit home health and hospice agencies often employ fewer registered nurses, social workers and full-time clinicians compared to non-profit agencies. This leads to each staff member seeing more patients, which limits the amount of time each visit can take. Such practices negatively impact the quality of care that patients report experiencing,” Halson wrote. “Since Compassus is a for-profit, private-equity-owned entity that aims to generate capital for its shareholders, I am very concerned about the sustainability of a career in health care and the constraints on my ability to provide the care that my patients need.”

Another comment raises concerns about the future of home care in Oregon’s rural communities.

“I am deeply concerned that the proposed joint venture will have a disproportionate impact on rural communities,” Elizabeth Marshall wrote. “Providence Home Health & Hospice serves many underserved areas. Rural regions already face significant challenges in accessing health care services. For-profit home health agencies, which prioritize profit over patient care, often scale back services in these areas, where travel can be costly and time-consuming. As a result, many rural patients may find themselves without access to home health and hospice care, leading to higher rates of hospitalization and poorer health outcomes.”

In October, Providence announced that it signed an agreement to form a joint venture with Compassus, focusing on management operations in Alaska, California, Oregon and Washington. This partnership encompasses a range of services, including home health care, hospice care, community-based palliative care and home care services.

Providence at Home with Compassus will be the name of the new venture. Providence’s Covenant Health hospice program will be rebranded in Lubbock, Texas as Covenant Health at Home with Compassus.

“We respect the regulatory processes in all the communities we seek to enter, and the state of Oregon has a clear process for review of proposed health care transactions,” a Compassus spokesperson said in an email to Home Health Care News. “In November, Compassus notified the OHA, to seek guidance on its review process for this transaction. From the outset, we understood regulatory reviews could add time to our anticipated transition timeline. We are prepared and committed to ensuring any questions or concerns are addressed. Ensuring the well-being of patients and their families, as well as the smooth transition of Providence caregivers to our team, are our top priorities.”

Since the launch of the HCMO program in 2022, the state has reviewed or begun reviewing 43 health care transactions. While regulators have not blocked any of these transactions, they have imposed conditions on some of the deals.